The Aftermath of Babcock

Transcription

1 California Law Review Volume 54 Issue 3 Article 5 August 1966 The Aftermath of Babcock Sandra Terzian Follow this and additional works at: Recommended Citation Sandra Terzian, The Aftermath of Babcock, 54 Calif. L. Rev (1966). Link to publisher version (DOI) This Article is brought to you for free and open access by the California Law Review at Berkeley Law Scholarship Repository. It has been accepted for inclusion in California Law Review by an authorized administrator of Berkeley Law Scholarship Repository. For more information, please contact jcera@law.berkeley.edu.

2 THE AFTERMATH OF BABCOCK Dissatisfaction with the traditional "place of wrong" rule 1 for its failure to consider the interests which jurisdictions other than that where the tort occurred have in the resolution of a particular issue erupted in the New York Court of Appeals decision in Babcock v. Jackson.' After reviewing cases from other jurisdictions in which the courts had circumvented the place of wrong rule by various devices,' enabling them to apply the law of a jurisdiction having a more compelling interest in the resolution of the legal issue involved, the court concluded that a new and more flexible approach should be adopted. The rule to be applied was one which would give "controlling effect to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation." 4 The approach used was essentially a "governmental interest" analysis.' However, the facts would have required the same result under all theories advocating change, and the language used was sufficiently ambiguous to enable each theorist to claim the decision a product of his approach. 0 The decision met with nearly universal approvalj and commentators sat 1 "The theory of the foreign suit is that although the act complained of was subject to no law having force in the forum, gave rise to an obligation, an obligatio, which, like other obligations, follows the person, and may be enforced wherever the person may be found... But as the only source of this obligation is the law of the place of the act, it follows that that law determines not merely the existence of the obligation,...but equally determines its extent." Slater v. Mexican Nat'1 R.R., 194 U.S. 120, 126 (1904); accord, Western Union Tel. Co. v. Brown, 234 U.S. 542 (1914); RESTATEmfEN, CoNCrT or LAws (1934). Cases applying the common law or guest statute of the place of accident despite a different forum law are collected in Ehrenzweig, Guest Statutes in the Conflict of Laws-Towards a Theory of Enterprise Liability Under "Foreseeable and Insurable Laws": I, 69 YALE L.J. 595, 601 nn (1960). 212 N.Y.2d 473, , 191 N.E.2d 279, , 240 N.Y.S.2d 743, (1963). 3 1d. at , 191 N.E.2d at , 240 N.Y.S.2d at (1963). See generally, EmwzwEo, CoNICT Or LAWS 104, (1962); Lambert, Reviews of Leading Current Cases, 30 NACCA LJ. 35, (1964); 49 VA. L. REv. 1362, (1963). 412 N.Y.2d at 481, 191 NXE.2d at 283, 240 N.Y.S.2d at 749 (1963). 5See text accompanying notes infra. O Comments on Babcock v. Jackson, a Recent Development in Conflict of Laws, 63 CoLum. L. Rlv (Cavers at 1219, Cheatham at 1229, Currie at 1233, Ehrenzweig at 1243, Leflar at 1247, Reese at 1251) (1963). 7See, e.g., ibid.; Webb, Conflict in Conflicts-Vested Rights Versus Proper Law: An English Don Reads Babcock, 9 Vnz. L. Rrv. 193 (1964); 49 IoWA L. REV. 934 (1964); 62 M.IC L. R-v (1964); 66 W. VA. L. REv. 126 (1964); 1964 Wis. L. REv. 316; 28 AxaANY L. REv. 128 (1964); 18 ARx. L. REv. 96 (1964); 38 Cozqe. BJ. 155 (1964); 32 FO=nnA L. REV. 158 (1963); 77 HARv. L. REv. 355 (1963); 79 LAW. Q. 484 (1963); 47 MAnQ. L. REv. 255 (1963); 15 SYRACusE L. Rv. 78 (1963); 38 TuL. L. REV. 398 (1964); 33 U. Cnc. L. REv. 119 (1964); 49 VA. L. REv (1963). 1301

3 1302 CALIFORNIA LAW REVIEW [Vol. 54: 1301 back to await further elucidation as the rule was applied to different fact situations. The disappointing clarification came in Dym v. Gordon. 8 This Comment will analyze Dym v. Gordon and contrast that decision and other New York cases with the decisions which would have been reached had a proper application of the "governmental interest" approach been used. I NEW YORK INTERMEDIATE LOWER COURT DECISIONS: RESISTANCE TO CHANGE Although the reasoning and results of the lower court decisions can, with few exceptions, 9 be described only as confused, two generalizations can be made: First, those courts which have regarded Babcock as establishing a new rule for choice of law questions generally have engaged in no analysis of governmental policy in deciding which law to apply. Instead, effect has been given to the law of the jurisdiction which has the greatest quantitative "contacts" with the issue, such "contacts" being selected without regard to their relevance to the particular issue. 10 Second, some courts have interpreted Babcock, not as adopting a new rule for choice of law decisions, but simply as establishing another exception to the place of wrong rule. 1 Unless the issue and precise facts before the court have been the subject of a specific prior holding, the place of wrong rule will be applied. Some courts openly adhere to the 8 16 N.Y.2d 120, 209 N.E.2d 792, 262 N.Y.S.2d 463 (1965). 9 0ltarsh v. Aetna Ins. Co., 15 N.Y.2d 111, 204 N.E.2d 622, 256 N.Y.S.2d 577 (1965) (application of direct action statute of place of tort); Ardieta v. Young, 22 App. Div. 2d 349, 256 N.Y.S.2d 199 (1965) (effect of settlement and release in foreign jurisdiction); Steinberg v. Fischman, 24 App. Div. 2d 457, 260 N.Y.S.2d 403 (1965) (same facts as Babcock); Blum v. American Youth Hostels, Inc., 21 App. Div. 2d 683, 250 N.Y.S.2d 522 (1964) (overruling Kaufman v. American Youth Hostels, Inc., 6 App. Div. 2d 223, 177 N.Y.S.2d 587 (1958), on issue of charitable immunity); Downs v. American Mut. Liab. Ins. Co., 19 App. Div. 2d 376, 243 N.Y.S.2d 640 (1963) (limitation on wage assignment); Zucker v. Baker, 47 Misc. 2d 840, 263 N.Y.S.2d 422 (Sup. Ct. 1965) (effect of settlement on action based on dram shop act); Freund v. Spencer, 46 Misc. 2d 472, 260 N.Y.S.2d 149 (Sup. Ct. 1965) (same facts as Dym, except that accident occurred in yet a third jurisdiction); Brewi v. Handrich, 45 Misc. 2d 121, 256 N.Y.S.2d 171 (Sup. Ct. 1965) (same facts as Babcock). 10 See Macey v. Rozbicki, 23 App. Div. 2d 532, 256 N.Y.S.2d 202 (1965); Ardieta v. Young, supra note 9; Fornaro v. Jill Bros., Inc., 22 App. Div. 2d 695, 253 N.Y.S.2d 771 (1964); Long v. Pan Am. World Airways, Inc., 23 App. Div. 2d 386, 390, 260 N.Y.S.2d 750, (1965) (dissenting opinion). IlLong v. Pan Am. World Airways, Inc., supra note 10, at 388, 260 N.Y.S.2d at ; Leonard v. O'Mara, 22 App. Div. 2d 835, 253 N.Y.S.2d 826 (1964); Estate of O'Connor, 21 App. Div. 2d 333, 335, 250 N.Y.S.2d 696, 698 (1964); Murphy v. Barron, 45 Misc. 2d 905, 908, 258 N.Y.S.2d 139, 143 (Sup. Ct. 1965); Manning v. Hyland, 42 Misc. 2d 915, , 249 N.Y.S.2d 381, 382 (Sup. Ct. 1964); Riley v. Capital Airlines, 42 Misc. 2d 194, 208, 247 N.Y.S.2d 427, 442 (Sup. Ct. 1963) ; Keller v. Greyhound Corp., 41 Misc. 2d 255, 257, 244 N.Y.S.2d 882, 884 (Sup. Ct. 1963).

4 19661 THE AFTERMATH OF BABCOCK 1303 place of wrong rule,' 2 while others arrive at the same result by a more circuitous route, such as finding that the place of wrong is the jurisdiction having the "most significant contacts."' 1 In addition, prior specific holdings are being construed as narrowly as possible;' 4 the courts are not extending the prior holdings by applying the rationale underlying the precedent to the issue presently before them. The first group of cases can be illustrated by Forncro v. Jill Bros., 15 a suit by New York parents against a New York corporation for the wrongful death of their five-year-old son. The corporation owned the automobile in which the child was riding when he received his fatal injuries. The child was a guest of the driver of the automobile, who was operating it with the corporation's permission on a purely personal shopping trip. The accident occurred in New Jersey. New York law made the owner of a vehicle liable when someone was injured as a result of the driver's negligence, provided the driver was operating the automobile with the owner's permission.' 6 Under New Jersey law, on the other hand, the owner was not liable for the negligent acts of a driver simply because that driver was operating the automobile with his permission. In order for the owner to incur liability for the acts of the driver, New Jersey law required that, at the time of the accident, the automobile be in use on the owner's business. Since Miss Jill was not engaged in corporate business when the accident occurred, the corporation was not liable unless New York law was applicable. While the court recognized that the traditional rule had given way to the rule that "'controlling effect' is to be given 'to the law of the jurisdiction which, because of its relationship or contact with the occurrence or the parties, has the greatest concern with the specific issue raised in the litigation,' "1 it held New Jersey law applicable because "the dominant contacts and the 'center or gravity' of this occurrence were in the state of New Jersey."' No reason was given to explain why New Jersey had the greater interest in having its law decide whether this New '2 Long v. Pan Am. World Airways, Inc., supra note 10, at 388, 260 N.Y.S.2d at 753; Leonard v. O'Mara, supra note 11, at 835, 253 N.Y.S.2d at 827; Estate of O'Connor, supra note 11, at 335, 250 N.Y.S.2d at 698; Murphy v. Barron, supra note 11, at 907, 258 N.Y.S.2d at 142; Riley v. Capital Airlines, supra note 11, at 208, 247 N.Y.S.2d at See Macey v. Rozbickl, 23 App. Div. 2d 532, 256 N.Y.S.2d 202 (1965) ; Fornaro v. Jill Bros., Inc., 22 App. Div. 2d 695, 253 N.Y.S.2d 771 (1964); Murphy v. Barron, 45 Misc. 2d 905, 258 N.Y.S.2d 139 (Sup. Ct. 1965). 14See Long v. Pan Am. World Airways, Inc., 23 App. Div. 2d 386, , 260 N.Y.S.2d 750, 752 (1965); Murphy v. Barron, 45 Misc. 2d 905, 908, 258 N.Y.S.2d 139, 143 (Sup. Ct. 1965) App. Div. 2d 695, 253 N.Y.S.2d 771 (1964). 1 6 N.Y. Vwc_.z & TRsAc LAW 388(1). 1 7 Fornaro v. Jill Bros., Inc., 22 App. Div. 2d 695, 253 N.Y.S.2d 771, 773 (1964). 18 Ibid.

5 1304 CALIFORNIA LAW REVIEW [Vol. 54: 1301 York corporation was to be held liable for injuries inflicted by one driving the corporation's automobile with its permission. Instead of analyzing the rationale underlying each state's rule to see if that rationale was applicable to the case, the court simply recited the number of New Jersey and New York "contacts" and concluded that New Jersey had more. 19 New York courts had repeatedly held that the statute invoked in Fornaro applied only to a vehicle used or operated in New York. 20 Under a proper governmental interest approach the Fornaro court should have examined the reason for imposition of liability and its limitation to automobiles used in New York. If the reason was to provide a financially responsible defendant for New York victims of automobile accidents, New York law might well be applied in order to effectuate this policy. If the intended beneficiaries (the intended benefit being to furnish the plaintiff with the means to pay") of the statute were those who furnished emergency medical aid and other assistance to the victims, this case would fall outside the scope of that policy. Since the accident happened in New Jersey, no New York residents would have furnished any such aid. If, on the other hand, the intended beneficiary was the general tax-paying public of New York who would otherwise have to support those victims denied private tort recovery, the injured victim's New York residence would be highly significant, and New York's policy could be effected by applying its law. Riley v. Capital Airlines 22 illustrates the second group of cases. The plaintiff's decedent had been killed when the defendant's airplane crashed in West Virginia on the return trip to New York from Atlanta, Georgia. The court followed specific precedent departing from the place of wrong rule on those issues where precedent existed. For the remaining issues, it relied on the place of wrong rule and one of its established exceptions, the substance-procedure characterization. Thus, under Kilberg v. Northeast Airlines" and Davenport v. Webb, 24 the court held that the issues 19 Ibid. 2 0 See, e.g., Selles v. Smith, 4 N.Y.2d 412, 414, 151 N.E.2d 838, 840, 176 N.Y.S.2d 267, (1958); Cherwien v. Geiter, 272 N.Y. 165, 169, 5 N.E.2d 185, 187 (1936); Miranda v. Lo Curto, 249 N.Y. 191, 192, 163 N.E. 557, 558 (1928). 21 See Watson v. Employers' Liab. Assur. Corp., 348 US. 66, 72 (1954) Misc. 2d 194, 247 N.Y.S.2d 427 (Sup. Ct. 1963). 239 N.Y.2d 34, 172 N.E.2d 526, 211 N.Y.S.2d 133 (1961). The Kilberg case involved a suit by the New York beneficiaries of a New York decedent killed in an airplane crash in Massachusetts. Suit was brought under the Massachusetts wrongful death act, which had a limitation on damages in the amount of $10,000. The court of appeals held that the Massachusetts limitation on damages would not apply, and that, instead, this issue would be decided in accordance with New York law N.Y.2d 392, 183 N.E.2d 902, 230 N.Y.S.2d 17 (1962). Davenport held that the issue of prejudgment interest was substantive, and must therefore be decided in accordance with the law applicable to the issue of damages.

6 19661 THE AFTERMATH OF BABCOCK 1305 of the nature and amount of damages and of prejudgment interest were to be governed by New York and West Virginia law, respectively. 25 In regard to the application of res ipsa loquitur, the court fell back on the old substance-procedure characterization and decided that, since the issue was a procedural one, New York law would govern. 26 The significance of the decision lay in the selection of the law governing distribution of damages. The New York and West Virginia statutes were not in conflict as to the identity of the beneficiaries; under both they were the surviving wife and children. However, there was a difference in the manner provided for ascertaining what percentage each distributee should receive. New York distributed the damages to each beneficiary in accord with the damages actually suffered, and provided for a hearing to determine the issue in each particular case. 27 West Virginia, on the other hand, provided for set percentages (one-third for the wife and twothirds for the children).2' The court determined that distribution should be made in accordance with the laws of West Virginia. Had the court analogized the reasoning underlying Kilberg and Davenport to the present case and used the rationale presented in Babcock, it would have concluded that New York should have the right to determine this issue as well. The court should have applied New York law because the case related to parties with whom New York was concerned. West Virginia had nothing to do with these beneficiaries. Its law regarding distribution of damages was not enacted with these parties in mind any more than was its law regarding the nature and amount of damages. Its legislature is not charged with providing protection for New York residents, and is indifferent whether the widow receives ninety percent or twenty-five percent of the recovery. The analogy which could have been drawn between this case and the Kilberg case and the reasoning underlying the Babcock case so clearly called for application of New York law to this issue that the only possible explanation for the decision was the court's unwillingness to depart from the place of wrong rule unless it could find a specific holding on the precise issue. Equally illuminating is Long v. Pan Am. World Airways. 29 The court held that the law of the place of injury determined who were to be the proper beneficiaries of a wrongful death action, and hence the proper parties to bring suit. In this case, the airplane carrying the decedent dis- 2 5 Riley v. Capital Airlines, 42 Misc. 2d 194, , 247 N.Y.S.2d 427, (Sup. Ct. 1963). 2 6 Id. at 203, 247 N.YS.2d at N.Y. DE=. EST. LAW W. VA. CoDE ANN. 4080, 4089(1) (b), 5475 (1955) App. Div. 2d 386, 260 N.YS.2d 760 (1965).

7 1306 CALIFORNIA LAW REVIEW [Vol. 64: 1301 integrated in flight and fell in Maryland. 30 The plaintiffs were the personal representatives of the deceased, and were entitled to bring the action under Pennsylvania law, the state of residence of the deceased. They urged application of Pennsylvania law to this issue. Since the deceased was not survived by any of the relatives specified in the Maryland statute, the defendant urged application of Maryland law. While the court recognized that the place of wrong rule was no longer "a complete statement of the situation today,"" it limited application of Babcock to situations involving the application of a restrictive 2 statute to New York residents where the situs of the accident was "incidental to the enterprise in which the parties were engaged. 8 Kilberg was distinguished because under the wrongful death statute of the place of wrong the proper parties had been suing in that case, and the court stated that the Kilberg decision reflected merely New York's refusal to apply a foreign law which conflicted with its strong public policy on limitation of damages. 8 4 Further, the court continued, New York had been able to characterize the issue of damages as procedural or remedial and thus apply its own law 3 5 The court apparently saw no analogy between Babcock, Kilberg, and the instant case, as it stated: The state of residence of the deceased has the greatest interest in the determination of the persons who can maintain an action for his death. So that if a choice is by any means permissible, the law of that state could be argued to govern. But a choice is not permissible. No interest in the state where the deceased resided can operate to give a cause of action to anyone when the statutes of that same state give him none and he is entirely dependent on -the laws of another state which likewise give him none. 36 Had the court examined the reasoning underlying Kilberg and Babcock, it would have concluded that the only state which should determine 30 Actually, the court was uncertain whether the airplane fell into Maryland or Delaware. However, since neither party claimed Delaware law applied, the court assumed the airplane had fallen in Maryland. Id. at 387, 260 N.Y.S.2d at Id. at 388, 260 N.Y.S.2d at The statute in question, set out infra note 39, provides that, unless the defendant was engaged in the business of carrying passengers for hire, the plaintiff is absolutely barred from recovery. Apparently, the court felt that this absolute bar was sufficient to distinguish the case App. Div. 2d at 388, 260 N.Y.S.2d at By adopting this interpretation, the court is asserting that Kilberg was merely another example of the old exception that the place of wrong law will be ignored when it offends the public policy of the forum. See Loucks v. Standard Oil Co., 224 N.Y. 99, 120 N.E. 198 (1918); EHamNzwEio, CoNricT Or LAWS 120 (1962) App. Div. 2d at 389, 260 N.Y.S.2d at Id. at 388, 260 N.Y.S.2d at 753.

8 19661 THE AFTERMATH OF BABCOCK 1307 the beneficiaries is the state of the decedent's domicile. No more violence is done to the statute by deciding this issue according to Pennsylvania law than was done to the Massachusetts statute in Kilberg by deciding the issue of amount of damages according to New York law. Both New York and Pennsylvania have established a cause of action for wrongful death. The scope of that cause of action is equally limited by the damages allowable under it as it is by the identity of those recognized as having been damaged, and therefore entitled to sue. Furthermore, it is impossible to imagine a situation in which a jurisdiction could have a more "incidental" connection with the enterprise in which the parties were engaged 37 II Dym v. Gordon: TWO STEPS BACKWARD Uncrystalline as was the reasoning in these cases, the waters were permanently muddied by Dym v. Gordon. 38 The facts of this case were quite similar to those in Babcock. The plaintiff and the defendant were both New York residents, and the accident occurred in Colorado, another jurisdiction having a guest statute. In both cases the defendant conceded his negligence. Both parties returned to New York, their permanent residence, where suit was commenced and prosecuted. However, whereas in Babcock the trip commenced and was to end in New York, and was simply a weekend trip to Canada, in Dym the situation was slightly different. The parties had each gone for a six-week period to attend summer school at the University of Colorado, and apparently met while taking the same golf class. There had been no arrangement made while they were in New York for the defendant to furnish the plaintiff with any transportation; the trip in question was entirely Colorado-based. Also, whereas in Babcock no other car was involved, in Dym the plaintiff's injuries were incurred when the defendant collided with another car. The only issue in both cases was whether the guest statute of the jurisdiction where the injury occurred should be applied, 39 thus precluding 3 7 See the circumstances described in note 30 supra N.Y.2d 120, 209 N.E.2d 792, 262 N.Y.S.2d 463 (1965). 39 The statute in Babcock provided: "I[The owner or driver of a motor vehicle, other than a vehicle operated in the business of carrying passengers for compensation, is not liable for any loss or damage resulting from bodily injury to, or death of any person being carried in... the motor vehicle...." ONT. R V. STAT. ch. 172, 105(2) (1960). The Colorado guest statute in Dym provided: "No person transported by the owner or operator of a motor vehicle as his guest, without payment for such transportation, shall have a cause of action for damages against such owner or operator for injury, death or loss in case of accident, unless such accident shall have been intentional on the part of such owner or operator or caused by his intoxication, or by negligence consisting of a willful and wanton disregard of the rights of others." CoLo. REv. STAT. AwN (1963).

9 1308 CALIFORNIA LAW REVIEW [Vol. 64: 1301 the plaintiff from recovery. In Babcock, the court held it should not; in Dym, it held it should. The reasoning underlying the two cases is quite different. Although Judge Burke claimed he was merely applying the reasoning in Babcock to reach his result, it will be shown that a new rule has evolved. The court in Babcock approached the problem by determining what policies the Ontario guest statute attempted to effectuate. 40 Having decided that the purpose of the statute was to guard insurers of Ontario drivers from the risks of assertions of collusive claims by guests and hosts, and also to guard Ontario drivers from having their insurance rates raised because of recoveries in potentially collusive suits, 4 the court held that, since no Ontario driver was involved, the policy which Ontario was attempting to effect by its statute simply was not relevant to the issues before it. 42 On the other hand, New York had a policy, exemplified by its legislature's refusal on three separate occasions to enact a guest statute, of affording its injured plaintiffs compensation for injuries which their negligent hosts had inflicted upon them. 43 This policy was reflected in the New York rule that a guest can recover from his host upon the showing of mere negligence. The problem of potential collusiveness was left to the courts to ferret out in each case. In other words, Ontario's guest statute was not applied simply because the rationale underlying its enactment had no relation to the facts of the case. On the other hand, what the court did in Dym was essentially to make an initial determination that, although this was a tort action, the disputed issue-the rights, liabilities, and incidents of the guest relationship-was contractual in nature. It then applied the test formulated in Auten v. Auten" 44 for choice of law on contract matters, and came to the conclusion that the jurisdiction whose law should govern this relationship was Colorado, where the (contractual) relationship had its nexus. After having done this, it proceeded to the "tort" question (was defendant liable?). This reasoning is not apparent from the language of the decision. The language is couched in terms of analysis of governmental interests. But, when one looks beyond the language used, and considers those factors 40 Babcock v. Jackson, 12 N.Y.2d 473, , 191 N.E.2d 279, 284, 240 N.Y.S.2d 743, 750 (1963). 41 1d. at , 191 N.E.2d at , N.Y.S.2d at Ibid. 4 3 Id. at , 191 N.E.2d at , 240 N.Y.S.2d at N.Y. 155, 124 N.E.2d 99 (1954). The test formulated in Auten was "instead of regarding as conclusive the parties' intention or the place of making or performance,... [applies] the law of the place 'which has the most significant contacts with the matter in dispute."' Id. at 160, 124 N.E.2d at , quoting from Rubin v. Irving Trust Co., 305 N.Y. 288, 305, 113 N.E.2d 424, 431 (1953).

10 19661 THE AFTERMATH OF BABCOCK 1309 deemed pivotal as well as those which were rejected or not considered at all, this reasoning, no matter how phrased, becomes clear. Consider, first, Judge Burke's analysis of the policies behind Colorado's enactment of its guest statute. Three are enumerated. The first two, prevention of suits by ungrateful guests and prevention of the assertion of collusive claims by guest and host against the insurer of a Colorado driver with its resulting increase in insurance rates of other Colorado drivers, prima fade have no application to the facts of the case. Since a Colorado defendant was not involved, neither insurers of Colorado drivers nor other Colorado drivers' insurance rates would be in the least affected by the recovery of this plaintiff against this defendant. This defendant's car was registered, garaged, and insured in New York, and his rates were based on recoveries obtainable in New York, including cases in which guests recovered from hosts for negligence. The beneficiary of this decision is the New York defendant's insurer, who has collected for this risk and will not have to pay for it. The third policy Judge Burke advances-protecting this defendant's assets from being depleted by this guest-plaintiff's recovery in order to preserve them intact for the driver or passengers of the other car-likewise has no application to the facts and reasoning of this case. First of all, Judge Burke cites no authority for this proposition, either from the legislative history of Colorado's guest statute or from decisions of the Colorado court interpreting its guest statute and the evils it was designed to meet. 45 This is understandable since, while the idea is intriguingly novel, there simply is no authority for it. Laying to one side the question whether it is proper for a New York court to interpret the Colorado statute in such a novel manner and assuming, arguendo, that such a practice would meet with approval, 46 this policy did not weigh at all, let alone heavily, in making the decision. The driver of the other car was not from Colorado, but from Kansas. While it might be said Colorado would still be interested in seeing that anyone injured within its borders could pay the Colorado residents who rendered medical aid to such party, and was therefore justifiably interested in affording him recovery, 4 this argument is (1) equally, if not more, ap- 4 5 The Colorado Supreme Court has ascribed the following two purposes to the enactment of the guest statute: (1) The prevention of suits by ungrateful guests (Dobbs v. Sugioka, 117 Colo. 218, 220, 185 P.2d 784, 185 (1947)); and (2) the prevention of fraud and collusion between guest and host, resulting in unjustly charging the host's insurance carrier for injury or death to the guests (Vogts v. Guerrette, 142 Colo. 527, 534, 351 P.2d 851, 855 (1960)). 46 Comment, Conflict of Laws-Two Case Studies in Governmental-Interest Analysis, 65 CoLum. L. Rav. 1448, 1459 (1965) (criticizing this aspect of the case). 47 See Watson v. Employers' Liab. Assur. Corp., 348 U.S. 66, 72 (1954); Oltarsh v. Aetna Ins. Co., 15 N.Y.2d 111, 204 N.E.2d 622, 256 N.Y.S.2d 577 (1965).

11 1310 CALIFORNIA LAW REVIEW [Vol. 54: 1301 plicable to the plaintiff in this case, and (2) this policy could not be effected unless the third party was able to maintain a suit. Judge Burke did not send the case back for a determination whether the driver of the other car was injured and, if so, whether he was himself free from fault so as to be in a position to sue the defendant. If the other driver could not maintain a suit against the defendant, Colorado's alleged policy of protecting defendant's assets for the other driver would manifestly not be relevant. Since it seemed immaterial to Judge Burke's argument whether either of these conditions prevailed, it will be assumed they were not considered important. Since none of the three policy rationales underlying Colorado's enactment of her guest statute could be effected by applying that statute to this case, it becomes clear that the decision is not really grounded on any "Cgovernmental interest" analysis. Upon consideration of the facts which Judge Burke did deem pivotal, and of the rule of law he laid down and the authorities cited to sustain his proposition, the decision in Dym v. Gordon represents two steps backward. What emerges is no more than the old "characterization" 48 ploy, ironically originally used to circumvent the place of wrong rule, made doubly dangerous because couched in misleading 4 " terms of "governmental interest." The pivotal factors upon which the case actually turned were that the parties had placed themselves "under the protective arm of Colorado law" by residing there temporarily, 0 and that the relationship arose out of Colorado-based activity. It was because Colorado had such "significant contacts with the relationship itself and the basis of its formation [that] the application of its law... [is] clearly warranted."" The pivotal, or 4 8 See EHRENZWEIG, CoN=c or LAws (1962). 49That this dichotomy between apparent and actual reasoning is both misleading and confusing is reflected in Comment, Conflict oj Laws-Two Case Studies in Government'al- Interest Analysis, 65 CoLum. L. Ray. 1448, 1458 (1965) (Dyrn represents a misapplication of governmental interest, implying there has been no departure from the basic approach); Comment, New York and the Conflict of Laws: A Retreat, 18 STN. L. RFv. 699 (1966) (Dyrn represents use of quantitative, as opposed to qualitative, contacts, implying there has been no departure from the basic approach); Note, 30 ALBANY L. Ray. 148 (1966) (Dym represents further illustration of governmental interest approach). 5 ODym v. Gordon, 16 N.Y.2d 120, 125, 209 N.E.2d 792, 795, 262 N.Y.S.2d 463, 467 (1965). This statement begs the question. The very issue was whether this particular aspect of Colorado's law was one to which the parties had become subject. While one can infer that a person has "chosen" to live under the "protective arm" of the law of a particular jurisdiction simply by placing his person in the territory of that jurisdiction, this inference can be sustained more easily with regard to laws regulating the area of permissible conduct (such as speed laws or criminal laws). The inference is not so patent with regard to a law regulating the effects of transgression of that area of permissible conduct by residents of another state. In addition, the statement can equally be said to be true of the parties in Babcock. 51 d. at 125, 209 N.E.2d at 794, 262 N.Y.S.2d at 467.

12 19661 THE AFTERMATH OF BABCOCK 1311 decisional, factor was the "seat" or "nexus" of the relationship. This "seat" or "nexus" was not to be determined solely from the physical situs where the relationship was created nor from the time of its creation, but rather from these two factors together with the intent 2 of the parties as inferred from their actions. 53 Having determined in which jurisdiction the relationship is "seated," one for the first time looks at the content of that law, the incidents which the jurisdiction attaches to the relationship. In other words, the law which is to have controlling effect is chosen with total disregard of its content. Consequently, the attempt to effectuate any policy that law represents is not only not pivotal, it is immaterial. In short, analysis of the "governmental interest" or attempted effectuation of policy by jurisdictions which will be affected by the outcome of the case plays no part in the choice of law. Once the authorities Judge Burke cites for his proposition that the law where the relationship was "seated" is to have controlling effect are examined, confusion mounts. These cases simply do not stand for the propositions for which they are cited. First, he cites Mertz v. Mertz 54 for the proposition that since the relationship itself is the reason for the special treatment, the jurisdiction where the relationship is seated has the primary interest in having its policy in regard to that relationship effected by having its law applied. 5 The Mertz case involved a suit in New York by a New York wife against a New York husband for injuries resulting from an automobile accident which occurred in Connecticut. Connecticut permitted interspousal suits, but New York at that time did not. The court of appeals upheld the dismissal of the complaint, not on the ground that since the relationship was a New York-based relationship, New York law should control its incidents, but on the basis that New York, as the forum, would not entertain such suits. 6 It was therefore immaterial where the relationship was "based." It would not have mattered if this marriage relationship had been Connecticut-based; New York simply did not entertain such suits. Second, Judge Burke cites workmen's compensation cases, and specifically Alaska Packers Ass'n v. Industrial Acc. Comm'n. 5 " In this case, 52 See discussion in text accompanying notes infra. 53 It is submitted that the reason that Judge Burke had so much difficulty formulating his test for the "seat" or "nexus" of the relationship is that he was trying to fit it into the formula stated in Auten v. Auten, 308 N.Y. 155, 124 N.E.2d 99 (1954) N.Y. 466, 3 N.E.2d 597 (1936). 55 Dym v. Gordon, 16 N.Y.2d 120, 125, 209 N.E.2d 792, 795, 262 N.Y.S.2d 463, 467 (1965) N.Y. 466, 473, 3 N.E.2d 597, 599 (1936); see also Gordon v. Parker, 83 F. Supp. 40 (D.C. Mass.), aff'd, 178 F.2d 888 (1st Cir. 1949) U.S. 532 (1935).

13 1312 CALIFORNIA LAW REVIEW [Vol. 54: 1301 a non-resident alien entered into a contract with Alaska Packers in California to work in Alaska during the fishing season. The contract recited that the worker elected to be bound by the provisions of the Alaska workmen's compensation law."" The Alaska workmen's compensation law provided that it was to be the exclusive remedy.5 0 California, at the time the contract was made, had a statute providing that California workmen's compensation laws should govern in cases where the employment contract was entered into in the state, even though the work was to be performed elsewhere. 0 The worker was injured in Alaska and returned to California, as required by the contract as a condition precedent to obtaining his wages, where he applied for workmen's compensation. The California Commission made an award under California law. Alaska Packers argued that the award violated the full faith and credit clause and the due process clause of the United States Constitution. The Supreme Court held that California could validly apply its statute. The Court's answer to the due process argument was that the formation of the employment contract within the state, although it was to be performed elsewhere, gave the state a legitimate basis for desiring to control the terms, obligations, and sanctions of the employment relationship. Having such a basis for the exercise of its police power, the only issue was whether the manner in which the power was exercised-the retention of the right to control the incidents of the employment relationship-was arbitrary or unreasonable.1 The Court held that because there was a practice of employing workers under such conditions as to make it improbable that those injured in Alaska would be able to apply for compensation there (since they were required to return to California to receive their wages), and, in addition, because there was such a slight possibility they would be able to return to Alaska in order to prosecute their claim there, California had a reasonable and legitimate interest in ensuring an injured worker would have some remedy. 2 In answer to the full faith and credit argument,' the Court said "every state is entitled prima facie to enforce in its own courts its own statutes, 4 and, since California had a legitimate interest in providing the 5 8 For the treatment accorded by the courts to a choice of law clause in an adhesion contract, see EmrsZwIG, CoNrucT OF LAWS 172 (1962). 59 ALAsxA STAT. Amr (1962). 60 CAL. LAB. CODE Alaska Packers Ass'n v. Industrial Acc. Comm'n, 294 U.S. 532, (1935). See the discussion of Alaska Packers in Currie, The Constitution and the Choice of Law: Governmental Interests and the Judicial Function, 26 U. Cm. L. Rav. 9, (1958). 62 Alaska Packers Ass'n v. Industrial Acc. Comm'n, 294 U.S. 532 (1935). 63 This argument was presented because of the Court's holding in Bradford Elec. Light Co. v. Clapper, 286 U.S. 145 (1932). See discussion in Currie, supra note 61, at Alaska Packers Ass'n v. Industrial Acc. Comm'n, 294 U.S. 532, 547 (1935).

14 19661 THE AFTERMATH OF BABCOCK 1313 remedy for this injured worker, the full, faith and credit clause did not require recognition of the substance of the Alaska workmen's compensation statute over its own. 65 In other words, since California would be the jurisdiction which would have to cope with the problems the injured worker would present, it had the right to determine the amount of compensation and the circumstances under which it would be awarded. It is quite different to say that the state where the employment relationship was entered into can constitutionally apply its law than it is to say that the law where the relationship is "seated" should be given controlling effect. The Court said nothing about which law should be given controlling effect. Furthermore, the reasoning underlying the Court's holding could better be cited for the proposition that New York's law should be applied in Dym, since New York is the jurisdiction which would have to cope with the problems of the injured plaintiff. 66 The relationship arising from an employment situation can more readily be analyzed in contractual terms, and more readily be governed by the parties' "intent," since the parties could rationally be said to have entertained some "intent" with regard to the incidents of the relationship when they entered into it; but the Court in Alaska Packers did not consider this contractual nature of the relationship controlling, and chose instead to recognize the interest of the jurisdiction primarily concerned with providing the particular workman with an adequate recovery, since it would bear the burden in the event an adequate private recovery was not provided. Only the most tortured legal thinking can construe a contractual relation out of the realities of a guest-host situation. 67 If the parties in Dym had made some agreement about what legal effect their relationship should have upon possible tort liability, the contractual analysis might be appropriate; but to say that the parties entered into this relationship with the intent that its incidents should be governed by Colorado law because they were then acting under its protective arm, having chosen to live there for a period of six weeks, 68 is to ignore reality. In any event, the relationship in Alaska Packers was "seated," under Judge Burke's test, 9 not in California, but Alaska. 65 Ibid. 66 For a discussion of the problems facing the states in regard to residents injured by automobile accidents, and suggested solutions, see Jacobs, The Financially Irresponsible Motorist: a Survey of State Legislation, 10 Vuz. L. R-v. 545 (1965); Conard, The Economic Treatment of Automobile Injuries, 63 Micr. L. Rav. 279 (1964); Comment, Private Insurance as a Solution to the Driver-Guest Dilemma, 62 MIE. L. Rav. 506 (1964). 6 7See, e.g., the dissenting opinion in the lower court decision in Babcock v. Jackson, 17 App. Div. 2d 694, , 230 N.Y.S.2d 114, (1962). 68 See note 50 supra. 69 See text accompanying notes supra.

15 1314 CALIFORNIA LAW REVIEW [Vol. 54: 1301 The third proposition Judge Burke advances is that the rationale of the decision in Kilberg v. Northeast Airlines, IncY. was the creation of the relationship between the decedent and the defendant airline in New York. He emphasized that not only was plaintiff's decedent a New York resident, but also the contract for the trip was made in New York by the purchase of the airline ticket, and the contract was partly performed in New York."' This statement flies in the very face of the holding in Kilberg. The case specifically held that an action in contract would not lie. 72 Even had there been no contractually-created relationship between the decedent and the airline, the same result would have been reached if the airline had negligently caused the decedent's death. Furthermore, Gore v. Northeast Airlines, IIw. 73 demonstrated that the decision in Kilberg was grounded on the reasoning that New York, as the jurisdiction which would have to cope with the problems of the surviving beneficiaries -since it was their domicile-claimed the right to implement its value judgment as to the amount of damages those beneficiaries were to receive. 74 Since the pivotal factor in the determination of which jurisdiction would have to cope with these problems was the beneficiaries' domicile, the place where the relationship between the decedent and the airlines was "centered," "seated," "formed," or "partly performed" was entirely irrelevant, and therefore not discussed. Gore held that, since the beneficiaries, who together with the decedent had been residents of New York at the time the ticket was purchased and at the time the accident happened, had since moved to another jurisdiction which would recognize the limitation of damages imposed by the Massachusetts wrongful death statute, the holding in Kilberg was not available to them. This was because New York's right to determine the adequacy of damages in a wrongful death action was founded on New York being the present domicile of the surviving beneficiaries. Since these beneficiaries had moved from New York, they were no longer proper objects of its concern, and the law which should be applied was that of their present domicile. If the basis of Kilberg had been what Judge Burke alleged it was, the court in Gore would have been required to hold that New York law was applicable to the amount of damages in that case as well, since the decedent in Gore also purchased his ticket in New York, thereby creating the contract between 70 9 N.Y.2d 34, 172 N.E.2d 526, 211 N.Y.S.2d 133 (1961). 71Dym v. Gordon, 16 N.Y.2d 120, 126, 209 N.E.2d 792, 795, 262 N.Y.S.2d 463, 468 (1965). 7 2 Kilberg v. Northeast Airlines, Inc., 9 N.Y.2d 34, 38, 172 N.E.2d 526, 527, 211 N.YS.2d 133, 135 (1961) F. Supp. 50 (S.D.N.Y. 1963). 7 4 Id. at 53.

16 19661 THE AFTERMATH OF BABCOCK 1315 the Gore decedent and the airlines, and since that contract was also partly performed in New York. Judge Burke ignored the line of cases that he might have cited in support of his proposition that predominant effect is to be given to the law of the jurisdiction where the relationship is "seated."" These are the interfamily immunity cases." 6 By analogy, these cases are the closest to the guest-host cases. Both involve special rights or disabilities which grow out of the existence of a relationship, not depending upon contract, and are imposed upon the parties because the legislature or courts of the jurisdiction have made a value judgment as to who should bear the loss in a tort situation solely because of the existence of the particular relationship. The issue is, again, which jurisdiction, in a case having multistate contacts, has the greatest claim to have its policy with regard to the relationship effectuated by having its law applied. Although many jurisdictions still adhere to the old rule that all rights and liabilities in a tort suit are to be governed by the law of the place where the injury occurred, 77 the more progressive jurisdictions have isolated this issue and decided that the applicable law is that of the family domicile. 78 This conclusion was reached by analyzing the policies underlying the rules of the various jurisdictions. If the reason underlying the imposition of immunity from interfamily suits is the desire to preserve domestic harmony or the avoidance of collusive suits against insurance companies by husband and wife, their family domicile should be the one to determine whether it fears the evil enough to prevent the possibility of its occurring by forbidding suits between the parties altogether. 7 9 If, however, the reason underlying the bar to such suits is that they are beneath the dignity of the court or that collusion in such instances would be too difficult to detect, 80 then, unless the forum is a jurisdiction having the immunity rule, there is no reason to apply it. Again, the reason the particular jurisdiction is selected as having the greatest right to govern the issue is that it is the one which must cope with the problem the rule was formulated to decide. 7 5 This line of cases is also analogous because the "seat" of the relationship will frequently be a jurisdiction other than that in which the relationship was "created." 7 6 See generally Emery v. Emery, 45 Cal. 2d 421, 289 P.2d 218 (1955) ; Thompson v. Thompson, 105 N.H. 86, 193 A.2d 439 (1963); Haumschild v. Continental Cas. Co., 7 Wis. 2d 130, 95 N.W.2d 814 (1959); see also Ford, Interspousal Immunity for Automobile Accidents in the Conflict of Laws: Law and Reason Versus the Restatement, 15 U. Prr. L. Rnv. 397 (1954). 77 Cases applying this rule are collected in EminEzwEiG, Courcr or LAws 220 nn (1962). 78 See cases cited note 76 supra. 7 9 See EHmtrzw GI, Cowrmcr oe LAWS 221 (1962). 80 See, e.g., Mertz v. Mertz, 271 N.Y. 466, 3 N.E.2d 597 (1936).

17 1316 CALIFORNIA LAW REVIEW,[Vol. 54: 1301 In summary: The particular result in each case cited by Judge Burke is that controlling effecl is given to the law of a jurisdiction which happens to be the place where the relation was centered or created; but the results were reached not because these were the jurisdictions where the relationship was centered or created, but by virtue of reasons wholly antithetical to the reasoning in Dym. Had Judge Burke followed the reasoning of these cases, he would have been lead to the inevitable conclusion that New York law should govern the issue of guest-host immunity in Dym. III THE GOVERNMENTAL INTEREST APPROACH A. Introduction Dym v. Gordon will now be analyzed in accordance with a proper "governmental interest" approach. This approach is utilized for several reasons: First, the application of theory to facts, in Dym and many of the other decisions, shows that many misconstrue the approach. 81 If specific examples of the approach are given, it would help clarify the theory. Second, while the analysis is restricted to guest statutes, the methodology used can be adapted to almost any issue that might arise. While the pivotal or decisional factors will differ according to each issue and each type of case, the methodology remains the same. B. Definition of "Governmental Interest" When a jurisdiction is said to have an "interest" 8 2 in the resolution of an issue, it means that the policy underlying the value judgment its legislature or courts have crystallized into a rule of law would be effectuated by applying that rule of law to the particular parties and the particular set of facts in the case presented for decision. A jurisdiction does not have an "interest" in the resolution of the issue simply because it has a policy with regard to this issue. For the jurisdiction to have an "interest," the parties or operational facts must be, in the context of the particular case, subjects which are proper objects of its regulatory concern. Regulatory functions will have different goals, depending on the different types of problems presented; which operational facts form the proper subject of a jurisdiction's regulatory function in a tort situation will vary from those in a contract situation, and these general examples can be further 8 1 See note 11 supra. 82 Beyond the scope of this Comment are choice of law problems involving the "act of state doctrine," or those where a foreign government actually has a proprietary interest in relation to one of the parties. See generally EmHENZWEXG, CONm Ir or LAWS 48(1) (b) (1) ("act of state doctrine").

18 1966] THE AFTERMATH OF BABCOCK 1317 divided and subdivided ad infinitum. Generally, however, a party or operational fact will be the subject of a jurisdiction's proper regulatory function when the jurisdiction will directly bear the consequences of the particular resolution of the particular issue in the particular case presented for decision. Whether a jurisdiction has an "interest" in the resolution of the issue will always be initially determined by the forum. C. Basic Method The method suggested is essentially 84 that advocated by Currie: 1. When a court is asked to apply the law of a foreign state different from the law of the forum, it should inquire into the policies expressed in the respective laws, and into the circumstances in which it is reasonable for the respective states to assert an interest in the application of these policies. In making these determinations the court should employ the ordinary processes of construction and interpretation. 2. If the court finds that one state has an interest in the application of its policy in the circumstances of the case and the other has none, it should apply the law of the only interested state. 83 Illustrative of pertinent policy considerations involved in different types of cases is the discussion in Currie, The Constitution and the Choice of Law: Governmental Interests and the Judicial Function, 26 U. CHi. L. Rv. 9 (1958). 84 The method differs from Currie's approach only in the following respect: Currie feels that courts should not "weigh" competing interests. If what he means by "weighing" is that a court should not, once it has found the forum has an interest in resolution of the issue, decide that the foreign state's policy is "better" and therefore that law should be applied, his statement is correct. In that instance, the court would be performing a legislative, as opposed to a judicial, function. No court can properly substitute its value judgment for that of the duly elected representatives in the legislature. If the conflicting domestic law was judicially formulated, as opposed to legislatively formulated, the court is, of course, free to reconsider the prior decision if it feels it was wrongly decided. In such event, if the court decides the foreign state's conflicting law represents the "better" decision, it may overrule its own prior decision and adopt a new rule of law consistent with that of the foreign state. However, it is still applying its own law. A court must necessarily make value judgments in determining what policy a rule of law is attempting to effect, and whether such policy applies to the facts in the case before it. In addition, the process of "minimization" of conflict between two rules (discussed infra in the text accompanying notes ) requires a court to "weigh" between specific rules and the general policy these rules were designed to implement. A court must, in undergoing this process, conclude that its own or the foreign jurisdiction has a specific rule which, if applicable to the facts in the case before it, would bring about a result which is contrary to a general policy which the two jurisdictions share in common. If the forum can find that both jurisdictions have the same general policy, although the specific rules each has adopted to implement that policy may differ, it can "minimize" the conflict by recognizing the general policy and applying whichever of the two seemingly conflicting rules effectuates the mutual general policy. For an illustration of the "minimizing" process, see Bernkrant v. Fowler, 55 Cal. 2d 588, 360 P.2d 906, 12 Cal. Rptr. 266 (1961). Contrast Lilienthal v. Kaufman, 239 Ore. 1, 395 P.2d 543 (1964), where the court failed to "minimize." See generally Kay, Book Review, 18 J. LWAL ED. 341, (1966).